And Just When You Thought It Was Over…
By Carlos Navarro, CEO of Reneux Marketing, LLC and author of this blog
Just when you thought it was over, the news got even worse today for Toyota. Many experts now believe that the accelerator issue may be a more serious electrical one, and may not be remedied by the special adaptor Toyota has vowed to begin shipping to its dealerships later this week.
I had the unfortunate experience of being the global vice president for a consumer healthcare business that was hit by a global recall in 2006. Observing the Toyota recall unfold over the past several days has reminded me of the lessons learned from my experience and from other recalls, and how Toyota apparently has not learned from history.
First and foremost, companies run into issues by waiting until a clear root cause is identified for a problem before taking action in the market. From a purely analytical perspective, this makes sense. Academics and Wall Street types have been urging companies for years to quantify and analyze issues – then take proper action. However, what’s lost in this approach is that in the court of public opinion, your root cause just does not matter. Sure, it’s critical to eventually get to a clear root cause that’s causing a recall such as Toyota’s accelerator problem, Renu’s related eye infections and, most notoriously, the deaths related to Tylenol consumption. But, in the end, it’s all about regaining consumer trust, which is the most important element of brand equity. If consumers don’t feel that you’re acting in their best interest – including pulling a product from the market at even the slightest potential public hazard, then you’re brand will be devastated. Rightfully so.
Therefore, take action quickly to protect your customers. Don’t let a problem percolate. Certainly, some issues are hard to pin-point and may require months, if not years, of investigation to uncover a clear root cause. Toyota is experiencing this right now, where there doesn’t appear to be a definite reason for the accelerator issue. However, rather than keep their cars on the market until a clear cause-and-effect is identified, the company should have taken action earlier in the best interest of their customers. This is especially critical where health and safety are in question.
Don’t claim that you’ve fixed the problem, unless you’re really sure you’ve fixed it. This seems logical, but in a crisis situation companies look for quick solutions to make the recall problem go away. However, claiming to have identified the root cause without thoroughly evaluating the problem can be a slippery slope. Toyota claimed to have identified the problem several days ago, and began manufacturing a modification to be shipped to dealers for installation by this Friday. Unfortunately, the company has lost even more credibility as experts suggest that it could be a more serious, electrical issue.
Don’t let your legal department determine what actions to take. Legal counsel’s advice is critical during this time. However, what may be best from a litigation preparation perspective may be quite different from what’s best for the long-term health of the company. Your legal team will be thinking about minimizing exposure to the inevitable lawsuits; however, the company’s ability to rebound from a recall will be driven by customers actually buying product again – and as quickly as possible. This will be driven by trust, not the outcome of lawsuits which could take years to resolve.
Hopefully, companies will study the lessons learned from this Toyota, and other prominent, recalls and act accordingly if faced with a similar situation. Let’s hope that they do.